Information is material if its omission or misstatement could influence the economic decisions of users based on the financial statements. Materiality is relative and depends on the size or nature of the item.


•   Material Revenue: A £1 million contract for a small company with annual revenue of £5 million is material because it significantly affects the company's total revenue.

•   Immaterial Expense: A £500 office supply expense may be immaterial for a large corporation with billions in revenue.

Real-Life Scenario:

A company's management decides that an unrecorded £10,000 legal settlement is material, as it could influence investor decisions if known